Pakistan’s economy on verge of collapse as Russia-Ukraine war continues: Report

INTERNATIONAL DESK: Pakistan’s economy which is already in a vulnerable position thanks to decades of corruption, mismanagement, and unstable governance, is now in a danger to collapse due to the economic fallouts of the Russia-Ukraine war, as per media reports.

According to a report by Michael Rubin, a senior fellow in Washington-based magazine, National Interest, warned of the collapse of Pakistan’s economy.

Citing the fallout of the Russia-Ukraine war, the reports said that it is having a negative effect on the economy of Pakistan.

“Russia’s invasion of Ukraine sent economic shockwaves across not only in Europe but also in the broader Middle East. Pakistan, whose economy is already weak because of decades of corruption, mismanagement, and unstable governance, has been particularly vulnerable,” the report reads.

It also highlights that because of the war in Eastern Europe, Islamabad requires wheat from both Russia and Ukraine.

“While many countries are dependent upon Ukrainian or Russian wheat or foreign energy imports, Pakistan requires both. Between July 2020 and January 2021, for example, Pakistan was the third-largest consumer of Ukrainian wheat exports after Indonesia and Egypt,” according to the report.

It also points out that Pakistan is currently marred with huge inflation and its trade deficit also reflects the country’s sorry state of affairs. It points out that Pakistan’s trade deficit of USD 50 billion as of June is a whopping 57 per cent increase over the previous fiscal year.

This is not a situation which should be seen in isolation. The collapse of Pakistan’s economy will show repercussions on Afghanistan as well. Afghanistan’s Chamber of Commerce and Investment (ACCI) said that the collapse of Pakistan’s economy will have a negative effect on Afghanistan, reported TOLO News.

“If the prices of wheat and flour are cheap in Afghanistan, it will be smuggled, but so far there is no concern in this regard, and there is no doubt that Pakistan is facing an economic crisis,” said Khanjan Alikozai, a member of the ACCI.

The article in National Interest said that the price spike in oil prices has hit Pakistan hard is augmenting the cost of its imports by more than 85 per cent, to almost USD 5 billion, just between 2020 and 2021.

“The collapse of the economic system of Pakistan will have dire consequences for Afghanistan as well, it will have a negative impact on export and imports, regional projects such as CASA 1000, the TAPI project, and trade,” said Shakir Yaqoobi, an economist.

It also stresses on Pakistan’s rupee which is hitting a new low with every passing day. Pakistrupee continues to “haemorrhage value when compared to the US dollar,” off more than 30 per cent over the past year.

The Pakistani rupee has dropped to a record low against the US dollar with the exchange rate sliding to PKR 212, local media reported on Monday. (ANI)